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Caution in sight on equities ahead of the US CPI

by Laetitia Volga

PARIS (Reuters) – The main European stock markets are expected without much change at the opening on Wednesday, pending the figures for consumer prices in the United States.

The first indications available point to a gain of 0.15% for the Parisian CAC 40 at the opening, 0.08% for the Dax in Frankfurt, 0.12% for the FTSE in London and 0.12% for the EuroStoxx 50.

Nervously awaited by investors, the monthly report on consumer prices, which the US Department of Labor will publish at 12:30 GMT, will determine whether inflation continued to slow in April in the United States.

It could also provide some guidance on further monetary policy from the Federal Reserve, which hinted at a possible pause in its rate hike campaign following its meeting this month.

The Reuters consensus gives a CPI index up 5% year on year last month, as in March, and 5.5% excluding energy and food products, after 5.6% a month earlier.

“If inflation remains stubbornly high, we expect the Fed to hold rates higher than markets are expecting, without actually raising rates,” said William Northey, at US Bank Wealth Management. .

While more data is expected this week in the US, including producer prices, investors are also keeping an eye on the US debt ceiling negotiations.

President Joe Biden and Republican leaders in Congress, led by House Speaker Kevin McCarthy, remained divided on raising the debt ceiling following a meeting at the White House on Tuesday, as the risk of a default on the debt on June 1 looms.

Another meeting is scheduled for Friday.

AT WALL STREET

Wall Street fell on Tuesday as investors showed increased caution ahead of the release of consumer prices and further talk in Washington about raising the debt ceiling.

The Dow Jones index fell 0.17%, or 56.88 points, to 33,561.81 points, the S&P-500 lost 18.95 points, or 0.46%, to 4,119.17 points and the Nasdaq Composite fell 77.36 points (-0.63%) to 12,179.55 points.

PayPal, with a 12.73% plunge, weighed on the S&P-500 and the Nasdaq after lowering its margin forecast.

Skyworks, Apple’s semiconductor supplier, fell 5.15% after saying it expects revenue and profit to fall short of expectations this quarter.

Among other stock moves of note, Boeing took 2.34% following Ryanair’s announcement of a multi-billion dollar order and Novavax jumped 27.79% after announcing a planned cut. 25% of its global workforce.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei dropped 0.37%, held back by profit taking the day after a closing high since January 2022.

However, the decline in Japan’s flagship index was limited by the 1.02% rise in Toyota, which posted better-than-consensus quarterly operating profit growth, thanks to a weak yen and higher production volumes. students.

Chinese stock market indices deepen their losses from the day before, still under the blow of disappointing foreign trade figures in April: the CSI 300 lost 0.9% and the Shanghai SSE Composite 1.29%.

EXCHANGES/RATES

The dollar retreats slightly against a basket of benchmark currencies as the meeting between Joe Biden and opposition leaders in Congress failed to reach a compromise on the debt ceiling.

The euro, at 1.0968 dollars, gained 0.07%.

The ten-year US yield fell just over a basis point to 3.5167%.

OIL

The announcement by the American Petroleum Institute (API) of an increase in crude reserves in the United States last week (+3.6 million barrels) while a decrease was expected by the Reuters consensus leads the market in the red.

Investors will follow the release of the Energy Information Administration (EIA) figures on stocks at 14:30 GMT.

Brent fell 0.7% to 76.9 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.73% to 73.17 dollars.

(edited by Bertrand Boucey)

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